2021 economic outlook remains positive despite COVID-19 resurgence

Hanoi (VNA) – Despite the complexity of the fourth COVID-19 wave, Vietnam’s GDP growth is forecast to exceed 6.5 percent this year on the back of surging industrial production and global economic recovery, according to Assoc. Prof. and PhD Dinh Trong Thinh, a senior economist from the Academy of Finance.

Given the economy is growing well in the first half of 2021, it is likely to expand over 7 percent in the remaining months, setting the scene for the country to achieve an overall GDP growth of at least 6.5 percent this year, Thinh told the Lao Dong (Labour) newspaper.

The coronavirus is gradually brought under control, he said, plus domestic production has been experiencing positive growth, with manufacturing and processing picking up at a current rate of 10 percent. The sector may rise by 17 – 18 percent during the final months of 2021, he added.

Data shows that industrial production index in the first five months of the year advanced 9.9 percent year-on-year, with manufacturing and processing up 12.6 percent. Total retail sales of goods and services hiked 7.6 percent year-on-year.

Thinh went on to say that the US, Chinese and EU economies are bouncing back, and increases in global credit demand will provide a good opportunity for Vietnam’s exports. The US’s economic growth remains positive at present and Vietnam’s shipments to the US is growing strong, he added.

A recent report by RongViet Securities Corporation (VDSC) forecast that the country’s GDP will grow by 7.2 percent in the second quarter of 2021 and 6.5 percent for the year as a whole.

Asian Development Bank (ADB) Country Director for Vietnam Andrew Jeffries said Vietnam is capable of achieving the twin goals of curbing the pandemic and sustaining economic growth this year. The country’s success in containing the virus has strengthened foreign investors’ confidence in its economy, he added.

It is important for Vietnam to boost growth and easy ways for small- and medium-sized enterprises (SMEs) to grow at the same time, thereby creating a solid foundation for a future private sector-led economy, Jeffries remarked.

According to the latest economic outlook report from Oxford Economics (OE), commissioned by the Institute of Chartered Accountants in England and Wales (ICAEW), despite the recent resurgence in COVID-19, Vietnam’s growth outlook remains optimistic and the economy is expected to return to pre-pandemic levels by the second half of 2021.

The country’s GDP is forecast to grow at 7.6 percent in 2021, among the highest rates in the region, the report said, noting that Vietnam was one of the few economies in the world to grow in 2020 due to its success in containing the pandemic.

“This early success enabled the economy to benefit from the surge in global trade activity and enjoy strong foreign direct investment flows that boosted export-oriented and manufacturing industries,” according to the report.

It said together with Singapore, Vietnam is expected to continue leading the region in recovery. “Despite a resurgence of COVID-19 cases in Vietnam, which has affected its manufacturing sector and export industries, its economy is predicted to rebound swiftly once restrictions are lifted,” the report read.

Economist Thinh emphasized that the most important thing at present is that Vietnam must give priority to giving COVID-19 vaccine to workers and preventing the virus from spreading inside companies and industrial parks.

Accelerating COVID-19 vaccine inoculation and keeping the coronavirus at bay remain key factors to sustain growth because with the COVID-19 resurging, declining incomes and economic conditions will have long-term impact on consumers’ spending behaviour and lifestyle, he said./.